CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

True or False?

I. Accounting profit includes a provision for income tax expense.
II. A company's tax expense is the tax return liability resulting from current period taxable income.
Correct Answer: Both statements are false.

I. Accounting profit is income before income tax expense.
II. The tax expense is the aggregate of income tax payable and any changes in deferred tax assets and liabilities.

User Contributed Comments 4

User Comment
poomie83 1. NPAT is the profit after provision for tax
2. wouldn't the taxable income lead to tax expense?
johntan1979 Nope. Get your terms right.

Accounting profit --- tax expense
Taxable income --- tax payable
johntan1979 Tax expense = Taxes payable + DTL

Taxable income = Pretax income + Temporary differences creating DTA - Temporary differences creating DTL

Taxable income = Pretax income - Accounting depreciation - Tax depreciation
Omosewa Taxable income= Pretax income + Accounting depreciation - Tax depreciation
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